Council defers bill to let property taxes, general funds go for rail

The Honolulu City Council voted 5-4 Wednesday to delay a decision on a bill that would allow the city to use property taxes or other general operating funds to build Oahu’s rail project.

Council Budget Chairman Joey Manahan urged colleagues to support a deferral to allow lawmakers at the state Capitol time to decide if they will hold a special session to consider extending the 0.5 percent general excise tax surcharge by an additional 10 years through 2037.

Holding off on a vote on Bill 42 would allow his Budget Committee “to focus on the (2018) budget at hand and give the Legislature some time to … have the necessary discussions so that we can continue addressing this issue of rail funding,” Manahan said.

The Legislature adjourned last week without any action on the rail matter, although at least some state lawmakers in both houses voiced willingness to allow the surcharge extension sought by Mayor Kirk Caldwell and Council leaders.

State lawmakers have given little indication since last week’s adjournment whether they will decide to hold a special session.

Caldwell and Council members have warned that without the extension, the city likely will need to raise property taxes if the project is to be built the full 20 miles from East Kapolei to Ala Moana Center.

Councilman Ikaika Anderson backed Manahan’s call to defer Bill 42. “It’s appropriate to hit the pause button at this time because the Legislature just adjourned,” Anderson said. “Give the legislative leadership in both houses time to reset, time to talk story and see exactly where they are going to be.”

Voting with Manahan and Anderson were Council Chairman Ron Menor and members Brandon Elefante and Kymberly Pine.

Council members Ernie Martin and Trevor Ozawa said they wanted to see Bill 42 die altogether, noting that supporting the measure would run counter to their vow to voters never to use property taxes for rail construction.

Martin voted against the deferral and asked that the Council kill the bill entirely. “I don’t know if a deferral is necessarily the right message we want to send to the state Legislature,” Martin said. “I think the state Legislature, in not being able to reach agreement, is frustrated. And I don’t think we should get into a cat-and-mouse game whereas the Legislature is waiting for the county to act, or the county is waiting for the Legislature to act to resolve this particular issue.”

Ozawa said that at recent neighborhood board meetings he has attended, there has been overwhelming opposition to using property taxes for rail construction. “What worries me is that we’re putting … the city’s core services second at the expense of the rail, and that’s something that’s really worrying the taxpayers today.”

Council members Carol Fukunaga and Ann Kobayashi joined Martin and Ozawa in voting against deferral.

The latest version of the state measure extending the surcharge included a requirement that the city lift its self-imposed cap on using city general funds for rail construction, and several of those who supported a deferral said they didn’t want to risk the possibility of the city losing out on additional GET funding because it failed to pass Bill 42.

Lloyd Yoshioka, a staff attorney for the Office of Council Services, said he believes Bill 42 was not necessary for the city to lift its ban on using general funds for rail and that simply placing a proviso into city budget bills would automatically lift the prohibition.

Newly chosen House Speaker Scott Saiki told the Honolulu Star-Advertiser on Wednesday afternoon that there has yet to be any discussion among members on whether to hold a special session, nor is there a timetable for deciding whether to do so.

“It’s really important for there to be a cooling-off period,” Saiki said. “Emotions ran really high during the last few weeks of the legislative session and everyone needs to take a step back and calm down.”

If lawmakers are to consider any overrides by Gov. David Ige, that’s supposed to take place July 11, or 45 days after the Legislature adjourns. “That’s the only potential date on the calendar at this point,” Saiki said.

Saiki said he’s not clear why Council members deferred Bill 42 and he advised that they pass it. “The City Council should keep all options open,” he said. “All it does is lift the prohibition on the use of city funds; it doesn’t require them to use city funds.”

He added: “It does not help to defer options at this point.”

Also Wednesday, the Council voted 6-3 to allow for the city to use GET surcharge funds beyond 2027 for rail construction. That point is moot if the Legislature chooses not to grant an extension.